Intraday Market Thoughts

Green Light For Debt Restructuring; NFP Is Next

by Ashraf Laidi
Mar 9, 2012 12:22

Greek debt restructuring can proceed; ISDA will meet later today; German CPI unrevised and trade surplus rose. UK manufacturing and industrial production declined while PPI input prices rose; Canadian unemployment rate declined. Focus is on NFP and trade balance data from US and Canada.

The USD trades slightly higher against all majors in the ongoing session. European equities are losing about 0.15% and the relative strength loser is NZD.

Greece can proceed with the debt restructuring as 69% of international debt holders and 85.8% of holders subject to a Greek law agreed to the swap deal. The Greek government said it would invoke the collective action clauses to impose the swap on other investors which will bring the participation nearly to 96%. The ISDA will meet today at 1pm GMT to determine if Greek credit event occurred which seems likely considering that the CAC were invoked. The second bailout totaling EUR 130 bln will probably be confirmed and delivered.

Data from Germany revealed that the final February CPI was unrevised at 2.3% y/y and the trade surplus rose in January to EUR 13.1 bln from previous EUR 12.9 bln as exports rebounded strongly.

GBP weakened after annual manufacturing production declined in January to 0.3% from 0.9% and industrial production contracted additional 3.8% from previous -3.1% which is the largest decline since 11/2009. PPI input prices rose in February 2.1% from 0.1% m/m on higher cost of oil suggesting that CPI may not drop as quickly as hoped in the months ahead. EURGBP jumped on the news to 0.8392 but has since lost all its gains.

Canadian employers lost 2.8K jobs in February from January's 2.3K growth. The unemployment rate declined to 7.4% from 7.6%.

The US session will bring the eagerly awaited NFP report at 8:30 am ET. It is expected to print 209K from previous 243K in February while the unemployment rate is seen steady at 8.3%. The ADP was strong and even though the jobless claims rose, the 4 week average declined. However, both ISM manufacturing and ISM non manufacturing showed that the employment sub index declined in February.

The trade deficit is anticipated marginally wider for January at USD 48.9 bln from previous USD 48.8 bln.

Canadian trade data is also due at 8:30 am and the surplus is expected to decline in January to CAD 2 bln from previous CAD 2.7 bln.

GBP volatility could increase at 10:00 am when NIESR releases its UK GDP estimate for February.


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